Title XI of FIRREA
The Appraisal Subcommittee (ASC) of the Federal Financial Institutions Examination Council (FFIEC) was created on August 9, 1989, pursuant to Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (Title XI). In response to the “Savings and Loan Crisis,” Congress adopted Title XI to address the problem of unregulated persons performing incompetent and/or fraudulent appraisals for federally regulated financial institutions. Title XI’s purpose is to “provide that Federal financial and public policy interests in real estate transactions will be protected by requiring that real estate appraisals utilized in connection with federally related transactions are performed in writing, in accordance with uniform standards, by individuals whose competency has been demonstrated and whose professional conduct will be subject to effective supervision.”
To carry out the purposes of Title XI, Congress empowered the ASC to:
- Monitor the requirements established by the States, territories, and the District of Columbia (States) and their appraiser regulatory agencies (State agencies) for the certification and licensing of appraisers. The ASC reviews each State’s compliance with the requirements of Title XI and is authorized by Title XI to take action against non-complying States. Other than persuasion, the ASC can issue a non-recognition order after a formal hearing. Such an order would prohibit the Agencies and many other Federal instrumentalities from recognizing the licenses or certifications issued by the non-complying State. The ASC has formal rules in the Code of Federal Regulations governing those proceedings;
- Monitor the requirements established by the Agencies regarding appraisal standards for federally related transactions and determinations of which federally related transactions will require the services of State licensed or State certified appraisers. The ASC performs this duty primarily through its Board members who are employed by those Agencies;
- Maintain a National Registry of State licensed and certified appraisers who may perform appraisals in connection with federally related transactions; and
- Monitor and review the practices, procedures, activities, and organizational structure of the Appraisal Foundation (Foundation). ASC staff actively monitors all activities of the Foundation. The ASC is also authorized to grant funds to the Foundation to support Title XI-related activities of the Foundation’s Appraiser Qualifications Board and Appraisal Standards Boards.
Title XI created a unique, complementary relationship between the States, the private sector, and the Federal government. Title XI recognized that the States were in the best administrative position to certify and license real estate appraisers and to supervise their appraisal-related activities. Title XI authorized the private sector — the Appraisal Foundation and its two independent boards, the Appraiser Qualifications Board and the Appraisal Standards Board) — to establish uniform minimum appraiser qualifications standards and uniform standards of professional appraisal practice. Title XI created the ASC to oversee the activities of the States and the Appraisal Foundation. Title XI also authorized the Federal financial institutions regulatory agencies – the Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency and National Credit Union Administration – and the U.S. Department of Housing and Urban Development (HUD) to adopt regulations regarding real estate appraisals made in connection with federally related transactions, including, when appraisals are required, who must perform the appraisals, and the manner in which appraisals must be performed.
Title XI Red-Line Version as amended by the Dodd-Frank Act